The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on prohibited gaming.
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No, they weren't personally in participation, however the world-famous celebs were notably consisted of in a slide presentation on social and sweepstakes casinos - the controversial websites using both complimentary casino-style video games and rewarding prizes, such as cash, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The sites are simply two cogs in the multibillion-dollar industry that now finds itself besieged by claims. In the eyes of lots of video gaming corporations, not to mention lawsuit complainants and state regulators, sweepstakes casinos act as conventional casinos, just without the oversight, customer defenses and tax laws. So not only can they avoid the steep 24-percent federal gambling levy, however sweepstakes operators aren't based on regulatory difficulties like anti-money laundering and responsible-gaming protections.
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One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the business deals with accusations of unlawful gambling in a New york city suit that declares VGW utilizes star endorsers to 'create a veneer of authenticity' around its product. (See VGW's declaration listed below)
'I'm not exactly sure" if you do not trust us, you can trust Paris Hilton" is a winning message for companies operating multibillion-dollar prohibited operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.
Sweepstakes endorsers consist of a variety of celebrities from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom offer any differences in between traditional gaming and sweepstakes play.
Paris Hilton is seen plugging Wow Vegas, among many sweepstakes casinos discovered online
Ryan Seacrest advises fans to dip into Chumba Casino, where many - however not all - video games are complimentary
Drake has a handle social sweeps gambling establishment, Stake, that he frequently touts on social networks
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Instead, advertisements normally focus around the social aspect of the gambling establishments, while leaving out the potential for real gaming losses.
Others lure consumers with promises of rewards. One such operator, Stake, ran a social media ad displaying Drake's automobiles, airplanes and mansions before pivoting to video of the rapper playing online casino-style video games.
'Daddy, why do we have so much money?' check out the very first caption on the screen.
Another caption explained: 'Because I never ever quit.'
The disparity between gaming sites and social or sweepstakes gambling establishments is a bit intricate, but operators of the latter insist they're not included with the former.
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A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA data, many of the players on social-sweepstakes casinos are playing for totally free.
'Most social sweeps consumers never ever buy,' the SPGA spokesperson told DailyMail.com. 'The minority of customers who make purchases do so in amounts far smaller than the typical deposit or bet size at real-money online sports betting websites.'
Social gambling establishments use consumers a chance to play casino-style games with good friends. Players have the choice to purchase worthless currency frequently referred to as 'gold coins,' which can not be exchanged genuine money, but can be used to unlock different functions within the video games.
But within the world of social gambling establishments exists sweepstakes video gaming, permitting clients to acquire other currency known as 'sweeps coins' that can be exchanged for cash or other rewards.
And therein lies the potential for monetary losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York City. One gamer informed the Washington Post he lost more than $100,000 on sweepstakes casinos in the previous year after continuing to buy more coins in pursuit of money and other things of worth.
The Philadelphia 76ers' Paul George is seen promoting a Worldwide Poker event
Social sweeps casino Stake ran an ad revealing off Drake's cars and trucks, airplanes and mansions
Karl-Anthony Towns of the New York Knicks is another NBA star plugging VGW's Global Poker
Traditional online casinos are banned in all however seven states, which has helped to fuel the popularity of sweepstakes casinos.
Anyone over the age of 18 can access the sweepstakes sites, which don't need typically need recognition. However, websites like Chumba will request for IDs from gamers attempting to withdraw any funds.
Many sites, like the crypto-compatible Stake, allow clients to submit mail-in ask for free sweeps coins, supplied the gamers follow painfully specific guidelines. What's more, players are often rewarded with sweeps coins simply for registering, therefore providing a reason to attempt their hands at any variety of gambling establishment video games for a chance to win - or lose - real cash.
So why are sweepstakes websites allowed to run in 48 states, while online casinos are prohibited in all but 7?
According to the stakeholders, their product is the complimentary casino-style gaming, and the real-stakes competition is simply a way of promoting their support.
'Social sweepstakes games are simply a type of online entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is needed to play at social casinos with sweepstakes rewards. Consumers never need to pay for a chance to win rewards. That lack of a purchase requirement - or" factor to consider" - is a crucial difference in between social sweeps and traditional online gambling sites like gambling establishments.'
Think of the way that McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and french fries that provide them the opportunity to win profitable rewards, such as a $1 million prize.
And without a purchase requirement, or 'consideration', the game itself doesn't satisfy the meaning of sports betting in the US.
'Sweepstakes are a long-standing technique for promoting all kinds of daily companies in the United States, whatever from hamburgers to magazine subscriptions to coffee and home improvement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are routinely used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'
But to numerous sports betting industry experts, that argument does not cut it.
For starters, gaming lawyer Daniel Wallach mentions, McDonald's Monopoly video game does not run forever. Rather, it has a distinct beginning and end, consequently suggesting the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote real products like fries, shakes, and the Filet-O-Fish.
'They do not last forever and they're typically not connected to casino-style games of chance,' Wallach told DailyMail.com. 'They're simply cash giveaways.
'The [gambling establishments] have none of the attributes frequently associated with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments provide" casino-like" payments, generally 80 percent or more of incomes, whereas the common payment portion for a temporary marketing sweepstakes is a trivial share of the revenue earned by the company [typically less than one percent]'
Wallach fasts to liken the online social sweeps gambling establishments to the web coffee shops that sprang up in Florida, providing consumers the opportunity to play casino-style games for real prizes. A lot of those brick-and-mortar establishments have actually because been shuttered over claims of illegal gaming.
DJ Khaled is amongst numerous celeb spokespeople for VGW's Global Poker brand
Now, Wallach argues, social sweeps casinos ought to deal with comparable examination.
'These differences are not arbitrary,' Wallach said of social sweeps casinos. 'They have actually repeatedly been mentioned by courts and state chief law officer as key consider identifying that a sweepstakes promo was in fact a guise for illegal sports betting.'
Among the gambling establishment industry's leading trade companies, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, in some cases, enact new legislation on the concern.
'Consumers are being deprived of defenses and states are forgoing considerable tax and income chances as this gaming replaces that carried out through managed channels,' read a well-circulated AGA memo.
And then there are the complainants who have sued social gambling establishments in more than a dozen states.
Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action claim, stating the settlement was made to prevent legal costs and continued lawsuits.
Michael Phelps has signed an offer with the VGW Group, which owns Global Poker
In the newest claim, which is largely similar to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is described in the filing as an 'prohibited gambling enterprise. '
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Apple and Google have actually also been named as offenders in claims for hosting the sweepstakes sites. But unlike VGW, neither tech company responded to DailyMail.com's ask for comment.
'We typically don't talk about matters before the courts,' a VGW representative told DailyMail.com by means of e-mail. 'However, we keep in mind that this claim has actually only simply been filed with the court and VGW has not been officially served.
'We have full confidence in our compliance with all laws and guidelines where we run, and remain positive about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games across the majority of North America, as we have for more than a decade, developing not only fantastic games, user experiences and home entertainment, but also ensuring this is done securely, properly and at the greatest level of standards.
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'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are fairly common across the online social games industry (and the US more broadly), and our basic practice is that we plan to vigorously protect any claim which might be brought against us.'
The problems in between standard online gaming and sweepstakes gambling establishments could prove problematic for some celebrity endorsers.
Towns, a star center with the Knicks, and the 76ers' George both back VGW's Global Poker brand while the NBA is partnered with conventional gaming titans like FanDuel and DraftKings.
'It's paradoxical that professional athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the very same time the leagues wish to forecast a strong position versus unlawful sports betting - specifically when attempting to tamp down the occasional gambling scandal,' Glaser told DailyMail.com.
It was just eight months ago that Toronto Raptors forward Jontay Porter received a lifetime ban from the NBA over allegations he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes casinos.
In addition to VGW, Apple and Google are being demanded hosting presumably prohibited gambling websites
Regardless, Glaser sees sweepstakes casinos as a major problem for leagues such as the NBA.
'I 'd expect that a league crackdown on athletes endorsing sweepstakes sites refers when, not if,' Glaser added.
Neither an NBA spokesperson nor the gamers' representatives reacted to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also ignored to react to DailyMail.com e-mails.
Asked if their star endorsers have a duty to discuss to customers the distinctions and similarities between iGaming and sweepstakes casinos, VGW insisted there is nothing more that requires to be done.
'We have full self-confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the spokesperson stated. 'Some of our worths are" our players precede" and" we do what's right", and we put our worths at the core of whatever we do.'
Glaser, an outspoken challenger of sweepstakes websites, sees things in a different way.
'Celebrities who lend their names to dubious illegal gaming sites are, at a minimum, putting their track records at danger along with courting civil and class actions by customers who allege damage,' Glaser said. 'There is also some risk that state regulators and state chief law officers rope celebrity endorsers into enforcement efforts for facilitating prohibited gambling.'
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Sweepstakes Casino Controversy And Celebrities' All important Role
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